LETTER FROM WASHINGTON

To Democrats Abroad

31 December 2009

Written by Tom Fina

Executive Director Emeritus

As the year closes, the President and his team can point to a series of accomplishments. Averting a major depression and beginning the slow process of returning the country to full employment is the most important. There is general agreement that while employment is the slowest factor to recover, a financial collapse has been avoided and our economy is recovering. Republicans argue that the President has delayed the recovery and has exploded the national debt.  Economists, however, mostly agree that Obama’s actions have been and continue to be effective. Public support for the President has been below 50% since mid November except for a return to 52% after his announcement of Afghan policy at the beginning of this month.

Obama’s top campaign priority was enactment of health insurance reform to provide coverage to the 46 million uninsured. Despite the uncompromising opposition of the Republicans in both houses of congress and disagreements among Democrats, he is on the verge of success.

The Congress is in recess until January 5. During this recess, the Democratic staff and members in both houses, with the active involvement of the President, are working to merge the bills now passed by both. There is agreement in both
bills on fundamentals to extend insurance to 94% (Senate) to 98% (House) from the present 83% of residents. Both require everyone to have insurance and for employers to provide it. Both provide for "exchanges" in which small business and individuals could buy insurance at group rates from competing insurance companies. Both would provide subsidies for low income and small businesses.  Medicaid would be expanded. There would be new restraints on insurance companies to oblige them, among other things, to accept applicants regardless of pre-existing conditions, bar them from canceling insurance, from capping their payments to an insured, from charging women more than men, requiring them to include children to 26 (Senate) or 27 (House) and to pay out 80-85% of their premium income in benefits. Both would reduce the projected national budget deficit: Senate by $132 billion in the first ten years; House by $104 billion the first ten years. Most of the changes would be phased in by 2014.

There are also important differences in the bills. Abortion coverage, who pays and how is insurance cost to be restrained and reduced are probably the hardest to reconcile. The Catholic bishops have led the charge to make abortion coverage more restrictive than at present. While they have long favored universal health insurance, they now oppose the entire bill unless their abortion position is accepted. Fortunately, the Catholic hospital association and the Catholic nuns Leadership Conference of Women Religious have endorsed the Senate compromise language which is less restrictive than that in the House hill (the Stupak amendment). It would appear that Catholic nuns are more sensitive to the needs of women least able to cope with unwanted pregnancy than the bishops who are in no danger of getting pregnant.

The President, the Senate and most healthcare economists believe that taxing high premium insurance plans to help pay for extending coverage is essential to begin to cut insurance costs. Organized labor, which has fought for this tax free compensation benefit, is opposed. It supports the House surtax on upper income taxpayers.

Both bills provide for experimental ways to cut costs. But, only the Senate bill provides a mechanism (an independent Medicare commission) to enforce successful cost reduction practices.

At this point, the working assumption in Washington is that a compromise bill will be hammered out and approved by both houses in time for the President’s State of the Union Address on January 26 or February 2. The Republicans at the national and state level are making every effort to deny Obama and the Democrats that opportunity to announce an historic public policy achievement. They are planning, instead, to try to repeal the legislation once passed and to try to overturn it in the courts before its benefits become apparent. As long as Obama is in the White House, a repeal (like that of the 1988 Medicare Catastrophic  Coverage Act in 1989) would face a certain veto. Hedging its bets, the White House now says that it doubts that the bill can be approved in time for the  State of the Union address.

Thus, as the year ends, it would appear that Obama’s strategy is working:  have the Congress develop the health care legislation rather than present an Administration draft as did President Clinton.

Over-arching any particular legislation, has been the growing polarization of the parties. Despite Obama’s pledge to put aside partisan quarreling, the party line split has become almost as fierce and poisonous as during the Gingrich assault on the Clinton Administration.

Although there are members of the Republican minority in both houses who agree with various of the Democratic positions, they have voted with their leadership on every important issue. There is wide agreement that the gap between the two parties has become so broad that the Congress is almost deadlocked. Any legislative action has to have a simple majority in the House but a 60 vote majority in the Senate. Moreover, Senate rules permit individual senators to prevent action on any nomination without limit of time or public justification. This is permitting Republicans to block hundreds of Obama’s nominations to the federal judiciary as well as to the federal agencies like Treasury, State, Defense and the rest. That includes the "hold" that Republican Senator De Mint (SC) has had on the confirmation of a new chief for the critical Transportation Security Administration!

Underlying this lock-step obstructionism is their strategy for gaining in the 2010 congressional and the 2012 presidential elections. That consideration unifies both Democrats and Republicans. Democrats are determined to keep their majority because they know that if they lose their 60 votes in the Senate and comfortable majority in the House, Republicans will be able (and will) block any Administration legislation. Since that means such legislation as that on financial regulation, air pollution, job creation and immigration, the Obama administration would largely fail in the President’s campaign promises. And, that would set up an environment favorable for Republicans in the 2012 presidential elections.

Thus, although there are very real differences on substance, the division between the parties today is secondarily about the substance of the policies and primarily about the next federal elections.

The health insurance reform legislation is the biggest card that both parties are playing for those elections. Republicans believe that the electorate will reward their unwavering obstruction because the new health insurance system will be unpopular - partly because they have worked to make it that way. Democrats believe that they are on the side of history in bringing about beneficial changes that will grow in popularity, as have Social Security and Medicare, when the public sees the completed package.

Which of these predictions prevails depends a lot on timing. The likelihood of public approval for the reforms would be high if they all could become effective immediately. Reduced medical costs, coverage of almost everyone and reduced budget costs are all long-term benefits that voters will not see at once. That is one reason that Democrats want to push up the effective date of the insurance exchanges and other changes from 2014 to 2012.

Republicans argue that the public opposes the reform legislation. They are exuberant with their claims that the public will punish Democrats voting for the legislation. They see it as the beginning of their recovery in 2010.

The latest Kaiser Foundation polling in December shows that only 35% think they will be better off with the reforms (down from 42% in November) while 27% think they will be worse off and 32% expect no difference. 45% think that the country would be better off with the reforms (down from 54% last month) while 32% think that the country will be worse off. Nevertheless, 54% think that it is more important than ever to have reform while 41% say that the country cannot afford it. Polling on the legislation has been exhaustive. The only conclusion to be drawn today is that the public is very closely divided, that attitudes depend on a respondent’s guess about the nature of the evolving legislation and that the results depend largely on how the questions are framed.

The President and Democratic leadership believe that public support for the
legislation will rise once a specific bill has been passed and signed. Right now, its provisions are uncertain and both conservatives and liberals are dissatisfied with one aspect or another. Each can see the negative features of the almost countless provisions still in play. After a final text is  available, some of the objections from both sides should fade. Many benefits will begin promptly including, in part, elimination of insurance company abuses and limits on their profits, inclusion of adult children, closing of the Medicare drug "doughnut hole", small business tax credits to help pay employee premiums, and other consumer insurance protections.

Much will depend upon the ability of the two parties to sell their interpretation of the new regime. In this, Democrats have an advantage in the person of the President who is still the most popular man in the United States (Gallup December 30, 2009: #1 Obama 30%, #2 George W. Bush 4% ). Moreover, voters tend to have more confidence in the President than in the Republicans on health care (Post/ABC December 19, 2009) although confidence in the Congress as a whole is at an all-(polling)-time low of 12% (Gallup June 2008). This helps to explain why the Republicans in Congress and at the state level are doing their best to recreate the "town hall" atmosphere of the last congressional recess which led to the precipitous decline in support for health care insurance reform last August. Ironically, during this congressional recess, the failed Christmas airline attack may be deflecting Republican attacks from health insurance reform to attacks on Obama for the Nigerian’s evasion of our screening net.

Whatever bill emerges from the merger negotiations, it is certain to be a vast improvement on our existing system. And, it will provide the platform on which to build perfecting additions as experience shows what works best and least. Enactment is the right action for Democrats not only because the legislation will begin to fix our broken health care system but also because it
will strengthen the President’s hand to proceed with the other fundamental changes which he promised and for which we voted.

Thomas W. Fina

Executive Director Emeritus

Democrats Abroad